Loading, Please Wait...

CST: 18/08/2019 09:07:06   

Exterran Corporation Announces Fourth Quarter and Full Year 2018 Results

173 Days ago

Strong Operating Results In-Line with Expectations 
Board Authorized $100 million Share Repurchase Program 
Over $25 million in Commitments for Exterran Water Solutions since November 
Contract Operations Win in the Middle East/Africa Region

HOUSTON, Feb. 25, 2019 (GLOBE NEWSWIRE) -- Exterran Corporation (NYSE: EXTN) (“Exterran” or the “Company”) today reported fourth quarter financial results.

Andrew Way, Exterran’s President and Chief Executive Officer commented, “We are very pleased with our results for the fourth quarter which were consistent with our expectations. Commercially we had a key win in the Middle East/Africa region for a fully integrated cryogenic processing plant. Within our water business we converted our trial from late last year into an ECO contract which builds strong momentum as we enter 2019. We have had over $25 million in commitments within the business both domestically and internationally since our last call.  We continue to focus on cash flow and returns which resulted in net cash from operating activities of $153 million for the year.

“Product bookings were $159 million in the fourth quarter up 40% year over year, with full year book to bill of 1.3x providing record year-end backlog.

“Our Board has authorized a $100 million share repurchase program that goes through February 2022.  We believe this program provides us another avenue to deploy capital to best drive shareholder value over the long run.”

Net loss from continuing operations was $5.3 million, or $0.15 per share, on revenue of $332.2 million for the fourth quarter of 2018. This compares to net income from continuing operations of $3.2 million, or $0.09 per share, on revenue of $334.8 million for the third quarter of 2018 and net income from continuing operations of $2.1 million, or $0.06 per share, on revenue of $337.7 million for the fourth quarter of 2017. Net income was $14.1 million for the fourth quarter of 2018, as compared to $5.4 million for the third quarter of 2018 and $6.7 million for the fourth quarter of 2017. EBITDA, as adjusted, was $51.5 million for the fourth quarter of 2018, as compared to $52.1 million for the third quarter of 2018 and $50.5 million for the fourth quarter of 2017. Income before income taxes was $11.1 million as compared to income before taxes of $11.2 million for the third quarter of 2018 and $5.2 million for the fourth quarter of 2017.

Selling, general and administrative expenses were $44.7 million in the fourth quarter of 2018, as compared with $45.1 million in the third quarter of 2018 and $44.5 million in the fourth quarter of 2017.

Contract Operations Segment
Contract operations revenue in the fourth quarter of 2018 was $88.2 million, a 4% increase from third quarter 2018 revenue of $84.8 million and an 8% decrease from fourth quarter 2017 revenue of $95.3 million.

Contract operations gross margin in the fourth quarter of 2018 was $61.6 million, as compared to gross margin of $57.1 million in the third quarter of 2018 and $61.1 million in fourth quarter of 2017. Gross margin percentage in the fourth quarter of 2018 was 70%, as compared with 67% in the third quarter of 2018 and 64% in the fourth quarter of 2017. Contract operations backlog at the end of 2018 was $1.4 billion, flat when compared the third quarter 2018.

The margin increase was driven by productivity and commercial negotiations.

Aftermarket Services Segment
Aftermarket services revenue in the fourth quarter of 2018 was $32.0 million, a 7% increase from third quarter 2018 revenue of $30.0 million and a 5% increase from fourth quarter 2017 revenue of $30.5 million.

Aftermarket services gross margin in the fourth quarter of 2018 was $7.1 million, a 9% decrease from third quarter 2018 gross margin of $7.9 million and a 12% decrease from fourth quarter 2017 gross margin of $8.1 million. Gross margin percentage in the fourth quarter of 2018 was 22%, as compared with 26% in the third quarter of 2018 and 26% in the fourth quarter of 2017.

The sequential decline in gross margin was largely driven by an increase in the mix of parts sales.

Product Sales Segment
Product sales revenue in the fourth quarter of 2018 was $211.9 million, a 4% decrease from third quarter 2018 revenue of $220.0 million, and flat from fourth quarter 2017 revenue of $211.9 million.

Product sales gross margin in the fourth quarter of 2018 was $26.6 million, a 16% decrease from third quarter 2018 gross margin of $31.8 million and a 9% increase from fourth quarter 2017 gross margin of $24.5 million. Gross margin percentage in the fourth quarter of 2018 was 13% as compared with 14% in the third quarter of 2018 and 12% in the fourth quarter of 2017.

The decline in revenue for product sales sequentially was largely due to timing of processing and treating orders, along with incremental shop hours committed to contract operations projects.  Although compression margins improved during the quarter the mix shift towards compression negatively impacted margin rate.

Product sales backlog was $705.8 million at December 31, 2018, as compared to $759.1 million at September 30, 2018 and $461.0 million at December 31, 2017. Product sales bookings for the fourth quarter of 2018 were $158.6 million, resulting in a book-to-bill ratio of 75%. This compares to bookings of $344.1 million for the third quarter of 2018 and bookings of $113.0 million for the fourth quarter of 2017.

Conference Call Information
The Company will host a conference call at 8:00 a.m. Central Time on Tuesday, February 26, 2019. The call can be accessed from the Company’s website at www.exterran.com or by telephone at 877-524-8416. For those who cannot listen to the live call, a telephonic replay will be available through March 5, 2019 and may be accessed by calling 877-660-6853 and using the pass code 13687171. A presentation will also be posted on the Company’s website prior to the conference call.

About Exterran Corporation
Exterran Corporation (NYSE: EXTN) is a global systems and process company offering solutions in the oil, gas, water and power markets. We are a provider of natural gas processing and treatment and compression products and services, providing critical midstream infrastructure solutions to customers throughout the world. Exterran Corporation is headquartered in Houston, Texas and operates in approximately 25 countries.

For more information, contact:
Blake Hancock, Vice President of Investor Relations, at 281-854-3043
Or visit www.exterran.com.

Non-GAAP and Other Financial Information
Gross Margin is defined as revenue less cost of sales (excluding depreciation and amortization expense). Gross margin percentage is defined as gross margin divided by revenue. The Company evaluates the performance of its segments based on gross margin for each segment.

EBITDA, as adjusted, a non-GAAP measure, is defined as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs and other items. EBITDA, as adjusted, excludes the benefit of the two previously announced sales of our Venezuelan assets.

Adjusted net income (loss) from continuing operations and diluted adjusted net income (loss) from continuing operations per common share, non-GAAP measures, are defined as net income (loss) and earnings per share, excluding the impact of income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), impairment charges (net of tax), restructuring and other charges (net of tax), the benefit of the previously announced sale of our joint ventures’ Venezuelan assets, the effect of income tax adjustments that are outside of the Company’s anticipated effective tax rates and other items.

See tables below for additional information concerning non-GAAP financial information, including a reconciliation of the non-GAAP financial information presented in this press release to the most directly comparable financial information presented in accordance with GAAP. Non-GAAP financial information supplements should be read together with, and are not an alternative or substitute for, the Company’s financial results reported in accordance with GAAP. Because non-GAAP financial information is not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Forward-Looking Statements
All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements may include words such as “guidance,” “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Examples of forward-looking information in this release include, but are not limited to: Exterran’s financial and operational strategies and ability to successfully effect those strategies; Exterran’s expectations regarding future economic and market conditions; Exterran’s financial and operational outlook and ability to fulfill that outlook; demand for Exterran’s products and services and growth opportunities for those products and services; and statements regarding industry activity levels and infrastructure build-out opportunities.

These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Exterran’s control, which could cause actual results to differ materially from such statements. As a result, any such forward-looking statements are not guarantees of future performance or results. While Exterran believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: local, regional, national and international economic conditions and the impact they may have on Exterran and its customers; Exterran’s reduced profit margins or loss of market share resulting from competition or the introduction of competing technologies by other companies; Exterran’s ability to secure new oil and gas product sales customers; conditions in the oil and gas industry, including a sustained imbalance in the level of supply or demand for oil or natural gas or a sustained low price of oil or natural gas; Exterran’s ability to timely and cost-effectively execute projects; Exterran enhancing its asset utilization, particularly with respect to its fleet of compressors; Exterran’s ability to integrate acquired businesses; employment and workforce factors, including the ability to hire, train and retain key employees; Exterran’s ability to accurately estimate costs and time required under Exterran’s fixed price contracts; liability related to the use of Exterran’s products and services; changes in political or economic conditions in key operating markets, including international markets; changes in current exchange rates, including the risk of currency devaluations by foreign governments, and restrictions on currency repatriation; risks associated with Exterran’s operations, such as equipment defects, equipment malfunctions and natural disasters; risks associated with cyber-based attacks or network security breaches; any non-performance by third parties of their contractual obligations, including the financial condition of our customers; changes in safety, health, environmental and other regulations; the results of governmental actions relating to Exterran’s pending Securities and Exchange Commission investigation; and Exterran’s indebtedness and its ability to fund its operations, capital commitments and other contractual cash obligations, including our debt obligations.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran’s Annual Report on Form 10-K for the year ended December 31, 2017, and other filings with the Securities and Exchange Commission available on the Securities and Exchange Commission’s website www.sec.gov. A discussion of these risks is expressly incorporated by reference into this release. Except as required by law, Exterran expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.

EXTERRAN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
                     
    Three Months Ended   Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Revenues:                    
Contract operations   $ 88,165     $ 84,828     $ 95,322     $ 360,973     $ 375,269  
Aftermarket services   32,045     29,993     30,496     120,676     107,063  
Product sales   211,943     220,028     211,871     879,207     732,962  
    332,153     334,849     337,689     1,360,856     1,215,294  
Costs and expenses:                    
Cost of sales (excluding depreciation and amortization expense):                    
Contract operations   26,613     27,768     34,251     122,138     133,380  
Aftermarket services   24,925     22,138     22,428     89,666     78,221  
Product sales   185,320     188,206     187,372     765,624     656,553  
Selling, general and administrative   44,674     45,103     44,463     178,401     176,318  
Depreciation and amortization   31,601     31,108     29,714     123,922     107,824  
Long-lived asset impairment       2,054     5,700     3,858     5,700  
Restatement related charges (recoveries), net   42     (342 )   408     (276 )   3,419  
Restructuring and other charges   311     264     154     1,997     3,189  
Interest expense   7,430     7,685     7,497     29,217     34,826  
Other (income) expense, net   145     (285 )   537     6,484     (975 )
    321,061     323,699     332,524     1,321,031     1,198,455  
Income before income taxes   11,092     11,150     5,165     39,825     16,839  
Provision for income taxes   16,365     7,954     3,082     39,433     22,695  
Income (loss) from continuing operations   (5,273 )   3,196     2,083     392     (5,856 )
Income from discontinued operations, net of tax   19,346     2,173     4,579     24,462     39,736  
Net income   $ 14,073     $ 5,369     $ 6,662     $ 24,854     $ 33,880  
                     
Basic net income per common share:                    
Income (loss) from continuing operations per common share   $ (0.15 )   $ 0.09     $ 0.06     $ 0.01     $ (0.17 )
Income from discontinued operations per common share   0.55     0.06     0.12     0.67     1.14  
Net income per common share   $ 0.40     $ 0.15     $ 0.18     $ 0.68     $ 0.97  
                     
Diluted net income per common share:                    
Income (loss) from continuing operations per common share   $ (0.15 )   $ 0.09     $ 0.06     $ 0.01     $ (0.17 )
Income from discontinued operations per common share   0.55     0.06     0.12     0.67     1.14  
Net income per common share   $ 0.40     $ 0.15     $ 0.18     $ 0.68     $ 0.97  
                     
Weighted average common shares outstanding used in net income per common share:                    
Basic   35,567     35,480     35,101     35,433     34,959  
Diluted   35,567     35,544     35,179     35,489     34,959  
                               


EXTERRAN CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
       
  December 31,
  2018   2017
ASSETS      
       
Current assets:      
Cash and cash equivalents $ 19,300     $ 49,145  
Restricted cash 178     546  
Accounts receivable, net 248,467     266,052  
Inventory, net 150,689     107,909  
Costs and estimated earnings in excess of billings on uncompleted contracts     40,695  
Contract assets 91,602      
Other current assets 44,234     38,707  
Current assets held for sale     15,761  
Current assets associated with discontinued operations 11,605     23,751  
Total current assets 566,075     542,566  
Property, plant and equipment, net 901,577     822,279  
Deferred income taxes 11,370     10,550  
Intangible and other assets, net 86,371     76,980  
Long-term assets held for sale     4,732  
Long-term assets associated with discontinued operations 1,661     3,700  
Total assets $ 1,567,054     $ 1,460,807  
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
       
Current liabilities:      
Accounts payable, trade $ 165,744     $ 148,744  
Accrued liabilities 123,335     114,336  
Deferred revenue     23,902  
Billings on uncompleted contracts in excess of costs and estimated earnings     89,565  
Contract liabilities 153,483      
Current liabilities associated with discontinued operations 14,767     31,971  
Total current liabilities 457,329     408,518  
Long-term debt 403,810     368,472  
Deferred income taxes 6,005     9,746  
Long-term deferred revenue     92,485  
Long-term contract liabilities 101,363      
Other long-term liabilities 39,812     20,272  
Long-term liabilities associated with discontinued operations 5,914     6,528  
Total liabilities 1,014,233     906,021  
Total stockholders’ equity 552,821     554,786  
Total liabilities and stockholders’ equity $ 1,567,054     $ 1,460,807  
               


EXTERRAN CORPORATION
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
                     
    Three Months Ended   Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Revenues:                    
Contract operations   $ 88,165     $ 84,828     $ 95,322     $ 360,973     $ 375,269  
Aftermarket services   32,045     29,993     30,496     120,676     107,063  
Product sales   211,943     220,028     211,871     879,207     732,962  
    $ 332,153     $ 334,849     $ 337,689     $ 1,360,856     $ 1,215,294  
                     
Gross margin:                    
Contract operations   $ 61,552     $ 57,060     $ 61,071     $ 238,835     $ 241,889  
Aftermarket services   7,120     7,855     8,068     31,010     28,842  
Product sales   26,623     31,822     24,499     113,583     76,409  
Total   $ 95,295     $ 96,737     $ 93,638     $ 383,428     $ 347,140  
                     
Gross margin percentage:                    
Contract operations   70 %   67 %   64 %   66 %   64 %
Aftermarket services   22 %   26 %   26 %   26 %   27 %
Product sales   13 %   14 %   12 %   13 %   10 %
Total   29 %   29 %   28 %   28 %   29 %
                     
Selling, general and administrative   $ 44,674     $ 45,103     $ 44,463     $ 178,401     $ 176,318  
% of revenue   13 %   13 %   13 %   13 %   15 %
                     
EBITDA, as adjusted   $ 51,472     $ 52,083     $ 50,501     $ 205,498     $ 173,155  
% of revenue   15 %   16 %   15 %   15 %     14 %
                     
Capital expenditures   $ 62,882     $ 57,992     $ 52,551     $ 215,108     $ 131,673  
                     
Revenue by Geographical Regions:                    
North America   $ 189,714     $ 215,015     $ 217,247     $ 858,934     $ 730,701  
Latin America   68,865     64,960     79,688     274,414     292,706  
Middle East and Africa   63,962     41,653     26,311     163,093     141,236  
Asia Pacific   9,612     13,221     14,443     64,415     50,651  
Total revenues   $ 332,153     $ 334,849     $ 337,689     $ 1,360,856     $ 1,215,294  
                     
    As of
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
                     
Product Sales Backlog:                    
Compression equipment   $ 471,827     $ 464,866     $ 254,745     $ 471,827     $ 254,745  
Processing and treating equipment   229,258     284,943     178,814     229,258     178,814  
Production equipment   2,438     5,450     14,138     2,438     14,138  
Other product sales   2,246     3,879     13,349     2,246     13,349  
Total product sales backlog   $ 705,769     $ 759,138     $ 461,046     $ 705,769     $ 461,046  
                                         


EXTERRAN CORPORATION
UNAUDITED NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
                     
    Three Months Ended   Years Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Non-GAAP Financial Information—Reconciliation of Income before income taxes to Total gross margin:                    
Income before income taxes   $ 11,092     $ 11,150     $ 5,165     $ 39,825     $ 16,839  
Selling, general and administrative   44,674     45,103     44,463     178,401     176,318  
Depreciation and amortization   31,601     31,108     29,714     123,922     107,824  
Long-lived asset impairment       2,054     5,700     3,858     5,700  
Restatement related charges (recoveries), net   42     (342 )   408     (276 )   3,419  
Restructuring and other charges   311     264     154     1,997     3,189  
Interest expense   7,430     7,685     7,497     29,217     34,826  
Other (income) expense, net   145     (285 )   537     6,484     (975 )
Total gross margin (1)   $ 95,295     $ 96,737     $ 93,638     $ 383,428     $ 347,140  
                     
Non-GAAP Financial Information—Reconciliation of Net income to EBITDA, as adjusted:                    
Net income   $ 14,073     $ 5,369     $ 6,662     $ 24,854     $ 33,880  
Income from discontinued operations, net of tax   (19,346 )   (2,173 )   (4,579 )   (24,462 )   (39,736 )
Depreciation and amortization   31,601     31,108     29,714     123,922     107,824  
Long-lived asset impairment       2,054     5,700     3,858     5,700  
Restatement related charges (recoveries), net   42     (342 )   408     (276 )   3,419  
Restructuring and other charges   311     264     154     1,997     3,189  
Interest expense   7,430     7,685     7,497     29,217     34,826  
(Gain) loss on currency exchange rate remeasurement of intercompany balances   996     164     1,957     5,241     (516 )
Loss on sale of business               1,714     111  
Penalties from Brazilian tax programs           (94 )       1,763  
Provision for income taxes   16,365     7,954     3,082     39,433     22,695  
EBITDA, as adjusted (2)   $ 51,472     $ 52,083     $ 50,501     $ 205,498     $ 173,155  
                     
Non-GAAP Financial Information—Reconciliation of Net income (loss) to Adjusted net loss from continuing operations:                    
Net income   $ 14,073     $ 5,369     $ 6,662     $ 24,854     $ 33,880  
Income from discontinued operations, net of tax   (19,346 )   (2,173 )   (4,579 )   (24,462 )   (39,736 )
Income (loss) from continuing operations   (5,273 )   3,196     2,083     392     (5,856 )
Adjustment for items:                    
Long-lived asset impairment       2,054     5,700     3,858     5,700  
Restatement related charges (recoveries), net   42     (342 )   408     (276 )   3,419  
Restructuring and other charges   311     264     154     1,997     3,189  
Loss on sale of business               1,714     111  
Penalties from Brazilian tax programs           (94 )       1,763  
Interest expense from Brazilian tax programs           (47 )       2,357  
Tax impact of adjustments (3)   (87 )   (196 )   22     (733 )   (1,458 )
Income tax benefit from Brazilian tax programs           (400 )       (14,244 )
Income tax benefit from U.S. and Argentina tax reforms           (8,708 )       (8,708 )
Adjusted net income (loss) from continuing operations (4)   $ (5,007 )   $ 4,976     $ (882 )   $ 6,952     $ (13,727 )
                     
Diluted income (loss) from continuing operations per common share   $ (0.15 )   $ 0.09     $ 0.06     $ 0.01     $ (0.17 )
Adjustment for items, after-tax, per diluted common share   0.01     0.05     (0.09 )   0.18     (0.22 )
Diluted adjusted net income (loss) from continuing operations per common share (4) (5)   $ (0.14 )   $ 0.14     $ (0.03 )   $ 0.19     $ (0.39 )
                                         


(1) Management evaluates the performance of each of the Company’s segments based on gross margin. Total gross margin, a non-GAAP measure, is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key components of our operations. Management believes total gross margin is important supplemental information for investors because it focuses on the current performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations, the indirect costs associated with our SG&A activities, the impact of our financing methods, restatement related charges (recoveries), restructuring and other charges and income taxes. In addition, the inclusion of depreciation and amortization expense may not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs from current operating activity.
 
(2) Management believes EBITDA, as adjusted, is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from outstanding debt), asset base (depreciation and amortization), our subsidiaries’ capital structure (non-cash gains or losses from foreign currency exchange rate changes on intercompany obligations), tax consequences, impairment charges, restatement related charges (recoveries), restructuring and other charges, expensed acquisition costs and other items. Management uses EBITDA, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, the Company's compensation committee has used EBITDA, as adjusted, in evaluating the performance of the Company and management and in evaluating certain components of executive compensation, including performance-based annual incentive programs.
 
(3) The tax impacts of adjustments were based on the Company’s statutory tax rates applicable to each item in the appropriate taxing jurisdictions. Using statutory tax rates for presentation of the non-GAAP measures allows a consistent basis for investors to understand financial performance of the Company across historical periods. The overall effective tax rate on adjustments was impacted by the inability to recognize tax benefits from charges in jurisdictions that are in cumulative loss positions.
 
(4) Management believes adjusted net income (loss) from continuing operations and diluted adjusted net income (loss) from continuing operations per common share provides useful information to investors because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of impairment charges, restructuring and other charges, restatement related charges (recoveries), expensed acquisition costs and other items not appropriately reflective of our core business.
 
(5) Diluted adjusted net income (loss) from continuing operations per common share, was computed using the two-class method to determine the net income (loss) per share for each class of common stock and participating security (certain of our restricted stock and restricted stock units) according to participation rights in undistributed earnings. Accordingly, we have excluded adjusted net income from continuing operations attributable to participating securities of $0.1 million and $0.2 million for the three months ended September 30, 2018 and year ended December 31, 2018, respectively, from our calculation of diluted adjusted net income (loss) from continuing operations per common share.

Is your business listed correctly on America’s largest city directory network of 1,000 portals?